Recession sets in, outlook for Europe is not positive

"The notion of the euro is very much more a political concept rather than a concept based on sound economics," said Desmond Lachman, resident fellow of the American Enterprise Institute during a discussion on "Assessing the Impacts of the Financial Crisis on Europe's Political Architecture" hosted by the Heritage Foundation. According to Lachman there is no positive outlook for the European markets and the euro. "There is no question now that Europe is in a recession...," Lachman said.

J.D. Foster, a Norman Ture senior fellow in the economics of fiscal policy at the Heritage Foundation, stated that Europe has always put more efforts into economic security than economic growth, underlining the reason why the economic crisis has had such an impact on the European markets. "Europeans put more emphasis on security and Americans traditionally put more emphasis on economic growth," Foster said.

Richard Rahn, director general of the Center for Global Economic Growth, mentioned several countries who will suffer tremendously from the economic crisis, for example Spain, Ireland and Italy. According to Rahn, countries like Estonia and Lithuania will not suffer as much from the crisis due to minor investments internationally. Rahn also mentioned that countries like Austria and the Netherlands are not in danger of going into in recession due to a majority of their investments being made in eastern Europe.

In conclusion, Rahn highlighted Norway, which due to its major oil resources, will be affected by the declining oil prices, but otherwise stay totally unaffected by the recession. "Norway shows what happens when you have a very small population and lots of oil, so the Norwegians have become very rich," said Rahn.